To What Extent Does Trade Help Reduce Development Disparities

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To what extent does trade help reduce development disparities?

The Republic of Malawi in the southeast of Africa is a landlocked country in which 85% of the people are employed in agriculture. About 90% of all farmers are smallholder farmers that suffer from low income and underdeveloped techniques. This is just one example of underdeveloped countries all over the world. The question is simple: How can these LEDCs develop? One approach of reducing development disparities is the mean of trade – the business of buying and selling commodities either within a country or between several countries.

Several countries have already initiated techniques to help LEDCs develop. China for examples encourages Chinese firmst to invest in poorer nations and opens ist own markets to imports from underdeveloped countries. This global foreign investment is a great opportunity to create development opportunities for LEDCs, especially because China itself has just had an extreme financial rise so that it is able to help others now. However, critics may think that China – by opening up its markets – rather sees its own benefit, as it secures raw materials and markets for Chinese manufactured goods. Furthermore, China gets richer and its global importance raises drastically. Experts expect it to overtake Japan’s economy soon.

Very different to this rather unfair approach of reducing development disparities due to trade is established by the FAIRTRADE foundation. This development organisation helps countries in the developing world to improve several different aspects such as sustainable prices for products that never fall under the market price, decent working conditions or fair terms of trade. To achieve this, specific FAIRTRADE certification and product labelling was developed called the FAIRTRADE mark – an independet consumer label. Things like the FAIRTRADE minimum price, which means that a buyer has to pay a certain price that is fair to the producer or FAIRTRADE...
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